Pursuing Long-Term Business Performance: Investigating the Effects of Financial and Technological Factors on Digital Adoption to Leverage SME Performance and Business Sustainability—Evidence from Indonesian SMEs in the Traditional Market

Florentina Kurniasari (), Elissa Dwi Lestari and Hendy Tannady
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Florentina Kurniasari: Faculty of Business, Multimedia Nusantara University, Banten 15810, Indonesia
Elissa Dwi Lestari: Faculty of Business, Multimedia Nusantara University, Banten 15810, Indonesia
Hendy Tannady: Faculty of Business, Multimedia Nusantara University, Banten 15810, Indonesia

Sustainability, 2023, vol. 15, issue 16, 1-20

Abstract: The traditional market holds a pivotal role in Indonesia’s economy because it is the main contributor to national retail grocery transactions. Nevertheless, competition with modern markets and retailers makes their competitiveness lessened. From the financial side, traditional market SMEs are vulnerable to financial risks and still face obstacles in accessing financial resources due to a lack of financial literacy. In addition, the level of digitalization of traditional market SMEs technology is also still low, so digital adoption is still a challenge that must be faced. Therefore, this study was conducted to identify the influence of financial and technological factors on the level of adoption of SME technology in traditional markets and its impact on the performance and sustainability of the SME business. This research will be conducted in a quantitative cross-sectional study of 225 SMEs in the traditional market. The sampling technique that will be used is judgmental sampling. This study’s research data will be analyzed using SEM-PLS. The study result shows that financial literacy positively affects SME financial accessibility and financial risk. The study also confirms that financial accessibility, performance expectancy, effort expectancy, and social influence are variables that significantly affect SMEs digital adoption, while the effect of financial risk on digital adoption is found to be insignificant. The study result also shows that SMEs digital adoption is positively affecting their performance, which eventually affects their business sustainability.

Keywords: business sustainability; SME business performance; technology adoption; financial factor; traditional factor (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2023
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